Stock Splits Video Lessons

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Problem: On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is: a) No entry is made for this transaction. b) Debit Retained Earnings $750,000; credit Common Stock $750,000. c) Debit Retained Earnings $250,000; credit Common Stock $250,000. d) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.

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Problem Details

On September 1, Ziegler Corporation had 50,000 shares of $5 par value common stock, and $1,500,000 of retained earnings. On that date, when the market price of the stock is $15 per share, the corporation issues a 2-for-1 stock split. The general journal entry to record this transaction is:

a) No entry is made for this transaction.

b) Debit Retained Earnings $750,000; credit Common Stock $750,000.

c) Debit Retained Earnings $250,000; credit Common Stock $250,000.

d) Debit Retained Earnings $250,000; credit Stock Split Payable $250,000.

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